So…Backblaze is “going public”. Do y’all think this will be good for users, bad for users, … ?
I don’t see this has anything with the users. It’s good for founders. The management team and board might remain the same, and hence won’t have any major effect on the users.
On the long run, it’s good for the users as the team will make sure not upset the public as this will have direct impact on their share price. Again that mentioned, I don’t see a company really lost anything significant in the recent days because of bad management decision. The public has fish memory and investors care about money.
Whether Backblaze goes public or stays private means nothing to me. But the fact that “Backblaze reported a $2.4 million loss on $16.2 million in revenue in the second quarter. While revenue grew 24% from the year-ago quarter, the loss widened from $1.9 million.” is a bit concerning.
If their IPO is successful it means they will have more money to operate while they try to become profitable. But I think I will set up Arq to also back up to OneDrive just in case they don’t.
Interesting that they’re sticking with the traditional IPO route rather than going with a SPAC.
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Yes, it’s not clear why they’re not using a SPAC. Although they just did a private round in August 2021 with TMT Investments, so something in that deal might have required the IPO. The company’s $60 million (+/-) forecast revenue for 2021 is a rounding error compared to the global cloud storage business.
The S-1 for the IPO (available here) has the usual strong disclaimer that “We cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability.” And the topline of their strategy is “get more customers”. Given their acquisition costs, that will be a difficult road to profitability.
My guess is the IPO is an engineered step toward being acquired. The main asset is their software (which they say over and over in the draft prospectus).
I won’t be quitting Backblaze yet – but will continue my strategy of diversifying backup destinations.
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I just think the the IPO stock offering to their customers is a scam in the making. The IPO is the first chance of the founders and current investors to exit. Since Backblaze is losing money, it doesn’t look like a good investment for us customers. But the influx of cash is great for the founders.
I think this is good for B2 users. The PC backup business won’t last forever. This IPO will buy them the time they need to replace that revenue with more B2 business and possibly another more advanced product.
Regarding the loss, it’s because they are deliberately outpacing their revenue growth with investments in R&D and sales, and incurring some additional administration expense as a cost of growing their headcount. As a B2 customer, you want to see that right now because their R&D is what lets them maintain high gross margins on storage without being Amazon- or Azure-sized. As a customer you want them to plan to be a going concern for decades and that’s more important than being profitable this year, especially when cheap cashflow is available due to market conditions.
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I’m a happy B2 customer, but am concerned that a 14 year old company isn’t profitable. Especially since they are in competition with Amazon, Google, and Microsoft.
Page 10 of their S-1 lists some of their challenges.
https://www.sec.gov/Archives/edgar/data/1462056/000119312521301141/d62601ds1.htm
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Perhaps this is fine. I’m personally leery after worked for a small company with a good chunk of compensation in non-listed stock that when the company was sold (IPO didn’t occur) my stock was virtually worthless while the founders made off with millions. My advice is don’t get involved with these things without expertise going in, which I’d guess 99% of their customers don’t have.
And Cloudflare—only listed as a partner, not a competitor, due to when the S-1 was written, but probably more likely to cap their growth outside of personal use of B2 than the incumbent blob/object storage providers. They give a good indicator of the vector B2 R&D needs to set.
I agree the risks section is mandatory and/or entertaining reading in nearly any prospectus and they generate a lot of ideas for me. In this one, though, the important information is in the income statement, statement of cash flows and the B2 breakout in disaggregation of revenue. I understand the surprise that B2 is a product that requires growing at a loss until it reaches a certain size, since Backblaze has talked about themselves as a profitable company in the past.
Good pull. I’m betting on Cloudflare making noise in the object storage space; really like what they’re doing.
The market isn’t paying for growth right now and this is a growth play. Look no further than commodities and the bond market. I like backblaze and hope they can pull this off, but the likelihood of price appreciation isn’t good. The big money is rotating out of growth…
I’ll agree that some of the reason to do an IPO is that the founders and investors are looking for an exit strategy, but this is a data storage company which means they have huge capital needs for their infrastructure to continue to scale up. There is no better way to raise a ton of capital than an IPO.
Only thing I can see happening is they push more into the enterprise and at worst their consumer product stagnant, though I’m not really sure where it could improve much.
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Did anyone decide to give the IPO a try? I got the prospectus and decided it wasn’t a fit for me. At my age, 70, I prefer more profitable companies.
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Is the IPO open only for US customers? I didn‘t get anything so far.
Or is there a signup form I didn‘t catch?
I believe it’s US residents only.
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